The Cayman Islands Monetary Authority on Wednesday reported a seven-year decline in the territory’s banking sector, that has seen a drop of about one-third of all retail and non-retail banking operations since 2010.
The annual report was presented to the Legislative Assembly and was accepted by lawmakers without comment.
The 2016 report noted a 10 percent fall off for retail and non-retail [class B] banking licenses when compared to 2015.
Between 2010 and last year, the total number of retail and non-retail banks licensed in Cayman fell from 266 to 176.
“Changes in the laws and regulations around the world have had some impact on banks in the Cayman Islands,” the CIMA report noted.
The agency noted that the decline in Cayman’s banking sector marked a worldwide trend since the 2008/09 global financial crisis. None of the world financial jurisdictions generally considered to be Cayman’s competitors saw any significant growth in banking licenses during 2016, and the Bahamas, Jersey, Hong Kong and Switzerland all saw slight decreases from the previous year.
Only Singapore saw growth in the numbers and that at a minuscule half a percent.
Reasons for the decline included a general contraction in global economic growth, “de-risking” activities (ending certain accounts or business relationships considered high risk), legislative reforms and mergers within the banking sector.
Bodden Town West MLA Chris Saunders, a banker by trade, summarized the results during his debate on the government’s budget Wednesday afternoon: “The pie is getting smaller, but we have to feed more people out of it.”
The local banking sector was something of a bright spot for the banking industry. CIMA officials stated that six retail banks here maintained assets and liabilities of US$14.3 billion.
“The domestic banking sector remained resilient in the face of the overall decline in total assets and liabilities of the entire banking sector,” CIMA’s report noted. “Commercial and retail customers continue to have confidence in the soundness of the domestic banking sectors.”
The retail banks have showed signs of “stable profits” during the past year, the report noted.
Cayman remains the second-largest offshore jurisdiction for international insurance companies, behind Bermuda, but growth in the international business sector was largely flat, CIMA officials noted.
Total profit for the local insurance market was more than $180 million at the end of 2015, the latest figures available from the financial regulator.
Total written premiums for domestic insurers was $555 million at December 2015, up from $535 million the year before.
General insurance, including health insurance, held 95 percent of the local market’s income from insurance premiums.